The USD/JPY has bounced back above our 1st tier downtrend and uptrend lines in reaction to a very negative Business Survey Index from Japan. The Survey indicates the Japanese economy continues to fall off a cliff, weakening relative to the U. S. economy.

As a result, America takes another step ahead in the battle of the comparative health of the two economies. Both Japan and America are implementing quantitative easing, though America's is more extreme in relation to GDP.

However, the USD/JPY is showing investors believe Japan may need to commit more funds to quantitative easing in order to counter the country's severe economic contraction.

The Cable is strengthening from our uptrend line as the Pound shows relative strength against both the Dollar and Euro after the EU released a highly negative Trade Balance.

However, the rally is stalling as investors await the speech from Geithner outlining America's plan to deal with the toxic assets on bank balance sheets. Regardless of the market reaction, the GBP/USD should hold up relatively well since no significant news will come from Britain until tomorrow's CPI release.

If the Cable should break above February 23 highs, we anticipate large near-term gains as the currency pair runs towards 2009 highs and the highly psychological 1.50 level.

The consolidation of the EUR/USD continues while the currency pair weakens Monday due to a much weaker than expected Trade Balance combined with a downward revision of the last release.

A declining Trade Balance reflects the weakness in Germany's production and manufacturing as exports decline and imports rise. Despite the seesaw behavior over the last few sessions, we anticipate the return to volatility shortly.

Last week's movement was historical and should result in refractions for the days/weeks ahead. Last week's flurry of news from the Federal Reserve greatly distracted investors from the underlying economic fundamentals. The distraction will continue today as Treasury Secretary Geithner reveals America's plan for dealing with toxic assets.